1) Check monovalve to see about heater
2) Is the system cleared of air, and/or is the temp sensor wire firmly attached? An "instant" drop in temp shouldn't happen based on cooling the engine down, but may indicate a gauge/sensor issue. If it wasn't that way before and the only change was a thermostat then it could be air in the system, or an inproperly installed t-stat.

For better advice try to be a bit more precise: what does "heater stopped working" mean? The blower runs, but air is cool; the blower stops; etc. What is the pushbutton setting and fan button?

What is the temp on the gauge as "pretty high"? Near the read @ 120? The middle mark @ 100? Where does it stay normally? What's the ambient outside?